House recesses with no deal on taxes

(AP)

Tuesday

Sep 30, 2008 at 12:01 AMSep 30, 2008 at 8:38 PM

House Democrats said Monday they would not relent in their dispute with the Senate on a major tax relief package, increasing odds that businesses could lose out on critical tax breaks and millions could get hit by the alternative minimum tax this year

House Democrats said Monday they would not relent in their dispute with the Senate on a major tax relief package, increasing odds that businesses could lose out on critical tax breaks and millions could get hit by the alternative minimum tax this year.

House Majority Leader Steny Hoyer, D-Md., suggested it might be next year before consensus can be reached on a tax initiative that includes adjusting the AMT, providing tax relief to disaster victims and extending tax credits for renewable energy development, business investment and individual education and child care costs.

The House had intended to adjourn for the year on Monday. But that plan abruptly changed when lawmakers rejected the $700 billion financial bailout legislation, forcing congressional and administrative leaders to regroup.

The House now plans to reconvene on Thursday, perhaps giving lawmakers another shot at the tax bill.

Lawmakers in both the House and Senate stressed the tax relief bill would create tens of thousands of jobs and contribute to the nation’s energy independence. But House Democrats insisted more of the package, totaling $138 billion in House bills, be paid for so as not to increase the deficit. Senate Republicans, averse to new taxes, said any changes in the Senate-passed tax bill would kill the entire package.

The House “has taken the morally and fiscally responsible position,” said Rep. Mike Ross, D-Ark., a leader of the 49-member Blue Dogs, a group of fiscally conservative Democrats. Meanwhile, “Republicans in the Senate continue to hold up this important legislation,” he said.

As Ross spoke, across the Capitol Senate Majority Leader Harry Reid, D-Nev., tried to bring up a House-passed bill dealing with renewable energy and extension of business and individual tax breaks that expired last year or will lapse at the end of this year. Republicans objected to consideration of the bill.

Reid acknowledged “we can’t get it done” because Senate Democrats don’t have the votes to move the bill without GOP cooperation. He said he hoped the Blue Dogs “would understand we are not trying to embarrass them or anyone else.”

The Senate still plans to meet later in the week before leaving for the year, and could conceivably try to take up the House-passed AMT fix separately.

Hoyer, joining the Blue Dogs at a news conference, said he would continue to work with Reid and “see what can be done even if it is next year.”

That delay would be a blow, at least temporarily, to a wide group of business and individual taxpayers.

Without congressional action, those affected by the AMT, originally aimed at just a few very rich tax dodgers, would grow from around 4 million to up to 26 million. Those hit by the tax, most earning less than $200,000, would pay an average extra tax of $2,000.

The solar industry alone has estimated it could create more than 400,000 jobs if it receives an eight-year extension of its investment tax credit.

“With hundreds of thousands of American jobs and billions of dollars in clean energy investment at risk, we urge congressional leaders not to leave for the election recess” until reaching an agreement, the CEOs of national hydropower, geothermal, solar and wind energy associations said in a statement.

Business groups have warned of serious repercussions if Congress does not renew the R&D credit, which expired at the end of last year, and various advocacy groups have pleaded for renewals of individual tax breaks affecting those paying college tuition, those from states with state and local sales taxes and teachers with out-of-pocket expenses.

The Senate last week, on a 93-2 vote, passed a massive package that included AMT relief, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana, and some $78 billion in renewable energy incentives and extensions of expiring tax breaks. In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions but does have revenue offsets for part of the energy and extension measures.

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